UNIVERSITY OF AMSTERDAM, FACULTY OF ECONOMICS AND BUSINESS MSC BUSINESS ADMINISTRATION, MARKETING TRACK
The impact of corporate visual identity (CVI) on
the perceived dominance of merging companies
Nóra Kozák (11086637) Supervisor: Dr. Karin Venetis
How to signal equality in a merger?
Date: 19th of August, 2016
Master’s Thesis
1 Statement of originality
This document is written by Nóra Kozák who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Table of content
1. Introduction ... 4
2. Theoretical framework ... 10
2.1 Mergers and acquisitions ... 10
2.2 Corporate branding ... 13
2.3 Joint brand strategy ... 20
2.5 Conceptual framework and hypothesis development ... 24
3. Methodology ... 29
3.1 Research strategy ... 29
3.2 Pre-test ... 29
3.3 Research construct and statistical procedure ... 31
4. Results ... 35 4.1 Descriptive statistics ... 35 4.2 Hypotheses testing ... 38 5. Discussion ... 44 5.1 Discussion of results ... 44 5.2 Limitations ... 47 5.3 Future research ... 48 5.4 Managerial implications ... 49 6. Conclusion ... 50 7. References ... 53 8. Appendix ... 59
3 Abstract
During a merger or acquisition, the new company has to make a decision on how to deal with the corporate brands and what to indicate towards the stakeholders. The application of different rebranding strategies allows communicating the desired change in the corporate identity. Through the corporate visual identity (CVI), a specific combination of names and logos signal certain communicational goals. This study examines, how these different combinations can communicate equality the most properly between the companies, when both companies’ brand elements are included in the new CVI.
The research applies an experimental model that aims to reveal the relationship between the companies’ role in the CVI and their perceived dominance. The role of the company is determined by the number and the type of brand elements. It further examines the relationship between the level of perceived dominance and the attitude toward the merged entity. An online survey containing 260 respondents provide valuable insights, using fictional brands in the movie industry.
Firstly, the findings reveal that when more brand elements are applied from one company, that company will be considered the more dominant. Secondly, the study also proves that when the name applied of a company, the company will be seen as more dominant, compared to the case when the logo is applied. Moreover, a weak but significant relationship can be detected between the level of dominance and the positive attitude toward the merged company.
The aforementioned results substantially contribute to the CVI literature in M&A and provide valuable insights for managers on how the role of their company in the new CVI affects to what extent their company will be perceived dominant compared to the other company.
Key words: Joint brand strategy, rebranding strategy, perceived dominance, number of brand
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1. Introduction
Based on the report of Investopedia, ‘globally, 2015 was one of the biggest years for deals both in the volume and in the size of the mergers and acquisitions. There were an estimated 26,000 deals, the majority of them in pharmaceuticals and healthcare, technology and energy’. The indicated reasons for M&A, based on the 2015 M&A Outlook Survey Report by KPMG, were the following: the target became available, the expansion of geographic research, the expansion of customer base, the entrance into new lines and businesses and the profitable operation through synergy. Among the biggest mergers and acquisitions, were the union of H.J. Heinz and Kraft Foods Groups, with the combined name Kraft Heinz Co., the acquisition of EMC Corp by Dell Inc., and Post Holdings Inc. announced to acquire MOM Brands Company as a new division. Companies are continuing to pursue mergers and acquisitions as an economic, personal or strategic growth path. Mergers can be undertaken to enhance the economic performance of a firm such as, increasing profitability, cost reduction, economies of scale or reaction to market failures. Second, mergers can happen because managers see an opportunity to gain personal benefit. These personal motives contain increased prestige or a managerial challenge. The acquisition of a competitor, raw materials, and the creation of market barriers as strategic goals, can be motives for a M&A too (Brouthers, Hastenburg and Ven, 1998). Further motives and goals were diagnosed (Capron and Hulland, 1998; Walter & Barney, 1990) such as the globalization of product markets, a desire to access a portfolio of international brands, difficulty in establishing new brands, the desire to promote visibility or achieve risk reduction in product diversification. Most of the time, M&A carried out on order to enhance growth and increase the net-value of the company. Therefore, numerous studies investigated to measure the actual financial benefits of a M&A and observed positive performance in increasing returns (in Gupta & Gerchak, 2002: Jarrell et al., 1988; Bradley et al., 1988; Hirshleifer, 1995).
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On the contrary, other academicians examined that many M&A activities fail to reach the anticipated purpose and the estimated failure rates are typically between 50% and 75% (Papadakis, 2005). The author, in addition to investigating the successful implementation of the M&A, highlights that the possible reason for the failure is that managers don’t focus on both internal and external contextual factors. In practice and in related literature a great deal of attention has been concentrated on assessing the "inside" benefits (systems, structures, resources, people and organizational culture) to be resolved and better exploited, while little attention has been paid to the "outside" factors—ways to assess the market benefits in terms of brand architecture, strategy and the communication of the new corporate identity (Ettenson & Knowles, 2006). Despite the fact, that an appropriate communication strategy (Papadakis, 2005), a fitting brand architecture (Muzellec & Lambkin, 2008) and well-managed corporate brand can significantly improve the odds of success in post-merger integration. Furthermore, Ettenson & Knowles (2006) diagnosed that in many cases, corporate brand strategy gained serious attention only after the deal was announced, that may be too late to preserve employee morale and satisfy customers. In the urgent decision making, the new corporate brand may be suboptimal, reflecting a chaotic process, driven-by short-term goals in the final stages of the negotiations. Consequently, it is unequivocal that (re)branding after M&A should be a crucial part of the pre-merger strategy. When handled properly, corporate rebranding can play a critical role in executing a strategy and ensuring that a productive relationship is maintained with the three key stakeholders: employees, customers and the investment community (Ettenson et al., 2006). However, a merged company has multiple ways to communicate the merger to the stakeholders, and the choice of the appropriate rebranding strategy is a prerequisite for the merger success.
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The concept of ‘rebranding’ describes a firm’s effort to redeploy or redevelop the intangible assets that are tied to an existing brand (Muzellec & Lambkin, 2008). Thus, when two companies enter into the merger process, they are, in effect, creating a new corporate identity that eventually affects the existing brand equities that the company built over a long period (Jaju et al., 2006). Consequently, the creation of a strong corporate identity is crucial for companies to encourage positive attitudes in their different target markets (Van Riel & Balmer, 1997, in Machado, Lencastre, Carvalho, Costa, 2011), and may provide an important competitive advantage. The major rebranding strategies are the One Brand-, Flexible Brand-,
New Brand- and Joint Brand Strategies that will be further discussed in the following
chapters. All of them reflect different intentions how to utilize both brands and may be determined by type of the M&A.
Some articles investigated these existing strategies, the drivers and the effect of the strategies (Basu, 2006) and the impact on stakeholders (Ettenson & Knowles, 2006), or with particular attention on customers, influence of the strategies on consumer-based brand equity, brand attitude or even product attitudes. (Muzellec & Lambkin, 2006; Balmer & Dinnie, 1999; Aldea, 2011; Roy and Sarkar, 2015; Vonno, 2012; Camarasu, 2014).
While these articles mostly focused on the difference in rebranding strategies, there is no article that thoroughly examined the Joint Brand strategy (or Combined identity) and it is not among the most commonly used strategies in the practice. Despite the fact, that after analyzing the performance of numerous company’s stock and market return -from the date of the deal’s closing to three years after the merger was complete- , Knowles et al. (2011) detected that only the fusion strategy exceeded the market return among the rebranding strategies. The strategy is likely to result in the event of a merger of equals, when companies rationalize overcapacity in the industry or when they anticipate a shift from individual products to cross-industry value experience.
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However, toward the stakeholders, the merger is often communicated in regard how they can benefit from the transition. The merger frequently signals synergy, that means the new company will be greater than its parts (Rao and Ruekert, 1994). Another message can be that the companies will cooperate, rather then compete with each other (Cheng, 2012, Schweiger, Csiszar and Napier, 1994). Finally, it should be emphasized that each company contributes significantly to the merged success (Ettenson & Knowles, 2006). Even if the companies are not totally equal in the merger, there is a tendency to advertise equality for psychological reasons (Brew, 2014), in order to further enhance the communicational goals mentioned above.
The corporate visual identity (CVI) – the visualization of the corporate identity through name, logo, slogan, etc. - can clearly reflect the identity of the merged company, the applied rebranding strategy and the communicational goals of the merger. In this case, a possible way to signal equality is to implement the brand elements of both companies.
In conclusion, it becomes increasingly evident, that merging companies should pay more attention to the external factors of the merger as well, particularly regarding the alignment of the corporate brand to the strategy they aims to communicate with the change. A necessary component to achieve these goals is to create an appropriate visual identity that reflects the role of the companies in the merger. For example, when the merging companies aim to show equality, the application of brand elements (name, logo) of both companies seems to be a satisfying option. However, within this strategy there are multiple ways to combine names and logos.
Even though, the combined identity is commonly applied by companies which aims to communicate the merger of equals (MOE), there is no experimental research that proved which forms of the combined identity signals equality the most properly.
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This article seeks to address this research gap, by analyzing how the different presentation of the same CVI (reflected in name and logo) impacts the perceived dominance of companies. In other words, it seeks to answer how companies should combine their names and logos to most efficiently convince stakeholders about the equality of the companies. Furthermore, this study also investigates whether the sense of equality used by merging companies is also a positive message for consumers.
The paper starts with an overview on M&A with special interest in corporate branding and its importance in the merger success. Thereafter, a short summary about corporate brands and the transformation of corporate identity is discussed. The change in corporate identity usually results in the change in the visual identity as well. This change allows the application of different rebranding strategies. One of them, the Joint Brand strategy is carefully introduced and selected as the focus of the research. On the basis of the theories, a research gap is found and the hypotheses are formed. After that, the research method and the results of the study are discussed. The paper ends with the discussion of the result, its limitations, the directions for future research and finally provides practical implications for managers.
9 Research questions:
How does the company’s role in the merged CVI influence its perceived dominance?
Sub-questions:
Is there an impact of the perceived company’s dominance on the attitude toward the merged company? Do consumers value if companies are indicated equal in a merger?
In order to give a proper answer to these questions and place them in context, the literature review will provide answers to the following sub-questions:
Why branding is important in mergers and acquisitions? – 2.1
Why corporate brands are unique and how they change during an M&A? – 2.2 What are the different rebranding strategies, merged companies can apply? – 2.2 When is the Joint Brand strategy applied, and what are its characteristics? –2.3
How does the different application of brand elements contribute to the perceived equality between the companies? –2.4
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2. Theoretical framework
2.1 Mergers and acquisitions
2.1.1 Merger versus acquisitionThis research will focus on and contribute to the merger literature; therefore it is necessary to distinguish between merger and acquisition. The two concepts are often mixed up and used as synonyms despite their substantial difference. When a firm acquires another firm, the buyer tends to offer money, stock, or both to buy assets (technical and financial) of the target company. The smaller company is often annexed and stops to exist and its assets become part of the larger company. Whereas mergers happen when two firms combine their resources (crossing stocks) offering the best to each other to form a new organization (Epstein, 2004; Giacomazzi et al., 1997). In legal terms, a merger requires two companies to consolidate into a new entity with a new ownership and management. Contrary, an acquisition occurs when one company takes over all of the operational management decisions of another and the acquired company ceases to exist. In other words, the question is whether the purchase is friendly (merger) or hostile (acquisition) (Investopedia, 2015). Even though it is necessary to distinguish between the two phenomena, the M&A are usually discussed together in the academic literature so as this paper will do as well. There are other forms of cooperation, such as strategic alliances, partnerships or joint ventures; M&A are in the focus of this research due to their frequent occurrence and durability from branding perspective. 2.1.2 Internal and external factors during M&A
As mentioned previously, a significant proportion of the M&A falls behind its expected purpose. The coverage of possible reasons had been a popular field in the M&A literature, including factors as unrealistic expectations, poor planning and communication, integration difficulties, talent lost or cultural conflicts (Schuler and Jackson, 2001; Brouthers et al., 1998; Cartwright andCooper, 1995; Risberg, 1997; in Papadakis, 2005).
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A plausible cause has recently emerged in the M&A literature, that argues, managers do not pay enough attention on the „external” issues of the merger. The external issues are outside the organization and include for example the target markets, brand architecture, products, positioning strategy and the communication of the new corporate identity. Instead, the „internal” issues gain more interest, as management styles, systems, resources, organizational culture or strategic orientation (Homburg & Bucerius, 2006; Ettenson & Knowles, 2006).
2.1.3 The neglected role of branding and communication in M&A
Corporate branding, as an external issue is often unwisely ignored. Ettenson & Knowles (2006) examined that corporate brand strategy was not a significant component of most companies’ M&A deliberations. In fact, two-thirds of the M&A studied, it received only a low or moderate priority during negotiations. Balmer & Dinnie (1999) has explained this phenomena that the driving forces for the M&A are rarely marketing related, the decisions about the corporate brand are often just an administrative practice well after the settlement of the deal. The authors set up a holistic approach on the failure of M&A and identified nine reasons why mergers fail (Balmer & Dinnie, 1999). Interestingly, five out of the nine reasons were somehow linked to corporate identity and communication. Among the reasons were the undue focus on short-term financial and legal issues to the detriment of term long-term corporate identity and communication, the delayed consultancy and the decisions on identity that is rarely placed in time in the merger process. Moreover, the company’s reputation does not gain enough attention and there may be unresolved naming issues about the new corporate identity. The recent research aims to contribute to the solution of the latter problem by providing insights how people evaluate different naming opportunities.
Despite the risk that an inappropriate branding and communication strategy reduces the merger success, it is generally accepted that the most damaging response is to do nothing and let the brands go their separate ways as they did before the pre-merger (Basu, 2006).
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Because, in case of lacking a deliberate branding strategy after the merge, with no solid brand platform to work from, the company integration will often be mismanaged, and communications to key constituencies will be miscarried. In the worst situation, the relationship between the two organisations becomes controversial, expected synergies disappear, employees become dissatisfied and lose their trust, and customers turn to be critical and discontent.
2.1.4 Successful corporate branding in M&A
Thus, it can be concluded that a clear and thoughtful corporate branding strategy and its communication should be treated as a key element in the successful implementation of M&A, particularly given the amount of confusion, uncertainty, and media attention that tends to follow these events (Balmer & Dinnie, 1999). This includes long-term planning that begins even at the formation of the merger idea, continuous two-way communications with all stakeholders, and consistent follow-through with everything the new brand promises to deliver (Johne, 2003). In other words, a clear branding strategy is vital in two directions: managing the communication of the strategic intent toward the marketplace and motivating internal stakeholders to align their personal goals to a common set of goals (Basu, 2006). Moreover, the branding strategy should include clear decisions on the four key aspects — corporate branding, product branding, brand identity, and brand architecture—in order to provide a robust support for successful brand mergers. This study examines mergers and acquisitions specifically in the light of corporate branding. Therefore the next chapter gives a short overview on corporate brands and how they are affected by a change such as M&A.
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2.2 Corporate branding
2.2.1 The characteristics of corporate brands
First of all, it is necessary to clarify the definition of brand and corporate branding. A traditional definition of a brand proposed by the American Marketing Association is “a name, term, symbol, design or a combination of them intended to identify goods or services of one seller or a group of sellers and to differentiate them from those of competitors”. Brands, therefore branding can have different levels within the company Keller (1998) identifies a brand hierarchy as being made up of the corporate brand, the family brand, the individual brand and preferably the modifier. This research examines corporate branding in the merger context, thus the review focuses on the highest level of brand hierarchy.
A good approach is to see corporate branding as “a systematically planned and implemented process of creating and maintaining a favourable image and consequently a favourable reputation for the company as a whole by sending signals to all stakeholders and by managing behaviour, communication, and symbolism.” (in Muzellec at al. p 807. 2006: Einwiller and Will, 2002, based on Van Riel, 2001). Corporate brand differs from product brand in terms of the disciplinary scope and management; moreover, it serves more complex roles, has a multi-stakeholder orientation and targets a broader audience (Balmer & Gray, 2003). On the corporate level, brands are not simply limited to the overall organisation. A wide variety of corporate entities have brands including corporations, subsidiaries or even groups of companies. The traditional corporate brand literature emphasized the role of corporate brand in B2B context, so the target audience tended to be the company’s shareholders, investors and employees, today there is an increasing evidence of gaining attention from customers as well.
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2.2.2 Changing corporate identity during mergers
Goi & Goi (2011) distinguish between internal and external causes for changing the brand identity. The external factors are the nature of the competition, external stakeholders, macroeconomic situation, the regulatory environment and major shifts in the marketplace. The internal factors include the change in the structure of business organisation, the requirement to craft a new image or brand personality, strategic changes due to merger or acquisition- that may trigger changes in the corporate identity. This study investigates the effect of the change on corporate identity caused by a merger between two companies. The phenomenon of this change is also called as “rebranding”. Rebranding is a decision on the fate of the corporate brands, on how to best utilize them, what to keep, what to discard, what to blend, and what to create as a new (Ettenson & Knowles, 2006). It is also an arrangement of the relationship of the companies and the corporate brand that reflects the relative power, dominance of each company. However, within growth strategies, in general only mergers and acquisitions are differentiated, they can entail different strategies in branding context. Four very different approaches can be distinguished: the acquisition, the merger of equals, the conglomerates (Epstein, 2004) and the creation of a new identity.
Growth through acquisitions, such as the takeover of BG Groups by Royal Dutch Shell, defines a process of fitting one smaller company into the existing structure of a larger organization. It often results in the dominance of the leading company’s brand and the termination of the smaller brand. Mergers of equals, such as Deutsche Boerse and LSE Group, involve two entities of relatively equal stature coming together and exploiting the best of each company and their brands. Conglomerates such as General Electric Co. are the third type of strategy, uniting large companies without a clear attempt to create synergies or meld strategies, but keeping them separate to provide the benefits of decentralization and autonomy (Epstein, 2004).
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Finally, companies in M&A may opt for a creation of an entirely new company. This strategy is also called the transformational merger. On the one hand, it is appropriate to signal radical changes, a new beginning to all parties (Basu, 2006) that can be refreshing and synergetic. On the other hand it may be considered the most threatening because it is not clear whether existing equities and associations are transferred to the new corporate brand (Ettenson & Knowles, 2006), it may even end in the loss of brand equities (Jaju, 2006) because the new company is unfamiliar to the consumer.
The aforementioned rebranding strategies show how the “corporate identity” can be changed during a M&A, by differently utilizing each company brands. Identity refers to the distinct attributes of an organisation and responses to the questions “what are we?” and “who are we?”. As the Strathclyde statement says : “Every organisation has an identity. It articulates the corporate ethos, aims and values and presents a sense of individuality that can help to differentiate the organisation within its competitive environment." Therefore, corporate identity addresses issues like business scope and culture among others, provides direction, purpose and meaning for the brand (Balmer & Greyser, 2003; Basu, 2006; Van Riel and Balkmer, 1997). It is seen to embrace a number of management practices, including corporate strategy, organizational structure, organizational design, corporate image, reputation and corporate communications (Balmer & Dinnie , 1999).
However, corporate identity may be hardly to detect and understand from outside of the company. Through certain instruments, the goal is to create a company image in stakeholders’ mind that is close to what in fact the company want to convey about itself. This company image is formed by nearly anything that is in relation with the company, such as the product, customer service, employees and PR activity. Indeed, one of the simplest and clearest ways to communicate identity is through the corporate visual identity (CVI) that internal and external stakeholders most commonly face.
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The recent research scrutinizes how CVI can communicate a change in the corporate identity caused by M&A. Thus, the next chapter introduces the different kinds of rebranding strategies that are usually applied.
2.2.3 Rebranding strategies
Based on the aformentioned definition of brand by AMA, a possible characterisation of rebranding is “the creation of a new name, term, symbol, design or a combination of them for an established brand with the intention of developing a differentiated (new) position in the mind of stakeholders and competitors” (Muzellec & Lambkin, 2006, p. 805).
Therefore, when two companies merge, they deliberately choose a new corporate visual identity (name and supporting visual devices) to create a specific position in the stakeholders’ mind. The CVI created after the merger can, but not necessarily (Brooks, Rosson, Gassmann, 2005) reflect the positioning and the power relations between the two companies. The CVI is a major factor in the strategic decision, since it symbolises the change in the organisation and is one of the few directly manageable instruments in building a new corporate identity. CVI is an ideal tool to draw attention to such a change. Thence, many organizations occasionally consider a corporate rebranding and are willing to invest large amounts of money in developing and implementing a new CVI (Bolhuis, de Jong, Bosch, 2015).
The decision on to which rebranding strategy to choose should be well-considered and aligned with the strategy that the merger aims to signal. The proper rebranding strategy is a conclusion on how to best utilize the merging corporate brands. As argued before, what elements to keep, what to discard, what to blend and what to create as a new (Ettenson & Knowles, 2006). The four growth strategies - the acquisition, the merger of equals, the conglomerates and the new identity -, may suggest the realization of the new CVI, however there are cases when the companies decide not to communicate the actual cause for the merger, but apply a CVI that signals a different strategy.
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Henceforward, the most fundamental rebranding models in mergers and acquisitions are described. The majority of the concepts build on name and logo changes in CVI, because these elements accurately reflect the organizational changes in the firms and the relationship between them. The variants differ depending on the power relations (dominance) and the desired communicational strategy of the merged identity. These intentions are manifested through to what extent the new identity contains brand elements of each companies and whether the new identity is composed of existing or new elements.
There are couple of academicians in the rebranding literature who investigated the different rebranding strategies and most of them distinguished four major groups. The four groups cover roughly the same combinations (Basu, 2006; Ettenson et al., 2006; Knowles, Dinner, Mizik, 2011; Machado et al., 2011). These are the One Brand strategy, The Flexible Brand strategy, the New Brand strategy and the Joint Brand strategy.
One Brand strategy
One brand strategy, (also called as Backing the stronger horse or Assimilation) includes organizations that retained the visual identity of one company and discarded the other, usually the weaker one (either the brand A or B remains). A good example for this strategy what Pfizer did when it took over Warner- Lambert (Figure 1):
This strategy is usually applied in case of acquisitions, with diverse power when the leading company aims to create a strong corporate brand (Rosson & Brooks, 2004; Ettenson & Knowles, 2006). It allows the leading brand to gradually exploit the equity of the acquired brand.
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However, when the acquired brand is a leading brand on its market with a high awareness and strong, favourable associations, it may happen that the visual identity of the acquired one remains (Aldea, 2011).
Benefits to scale and presence are usually highlighted in the communication that can be best achieved through a single, strong, unified identity across the merger identities. On the other hand, the replacement of one company’s brand may signal a slash-burn strategy including a single winner. That potentially harms the employee morale at the “loser” company and also the customers may worry, their relationship with the company will not be honoured. Furthermore, this alternative does not capitalize on the equity of the “disappearing” brand (Ettenson & Knowles, 2006).
Flexible brand strategy
The flexible brand strategy (also named as Business as usual and Differentiated identities) means maintaining both brands and applying them (A/B) in various context. This was the case at the Altria – Philip Morris USA spin-off (Figure 2):
It is preferred when a simple portfolio transaction occurs, driven by a geographic roll-up or a product/market extension (Basu, 2006). In most cases, the company brands are used independently from each other, which enable the retention of values associated with each brand, and avoid the risk that a company may negatively affect the other (Aldea, 2011). The organizations can position their brands clearly according to their specifi benefits that allows for optimum market coverage (Aaker & Joachimsthaler, 2000). This strategy may also be an intermediate stage which supports a gradual absorption into the acquirer’s brand (Basu, 2006).
Figure 2: Illustration of the flexible brand
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It symbolizes that the companies maintain status quo which is especially worthwhile if the offerings are seen as different in terms of segments, products, etc. Keeping the companies dissociate in the communication may suggest for the employees that they can keep their own corporate culture with a minimal disruption. Moreover, it also leave the customers uneffected who are comforted with the familiar.
In turn, this strategy does not take advantage of scale economies and synergies concerning brand communication, and stakeholders may doubt the actual necessity of the M&A (Machado et al., 2011)
New brand strategy
The merging firms might decide to adopt a new corporate brand that is different from both of the pre-merger corporate brands (C), as Bell Atlantic and GTE created Verizon (Figure 3):
It is particularly used when the new company wishes to signal a radical transformation following the merger to all stakeholders (internal and external). The decision to create an entirely new identity reflects a new beginning and helps communicate that the new company will do things differently in e.g. corporate structure and culture, positioning strategy, product mix or in customer reach (Jaju et al., 2006).
However, this is the most risky strategy, since the loss of equity associated with the two corporate brands is significant (Jaju et al.,2006). Building a new identity is also an appropriate choice when the existing companies arouse negative associations in the mind of stakeholders, as it gives the opportunity to start with a clean slate.
2.3 Joint Brand strategy
The joint brand strategy is still an unexploited field to research; indeed few significant findings were found on the reactions its application arouses in consumers. It is, in spite of its potential success in financial terms (Knowles et al., 2011), and the benefits that the maintenance of both brands can provide for stakeholders.
The joint brand strategy (used as the Combined identity, Fusion or Best of both as well) represent the cases when companies adopt the best of both brands (A&B). In terms of CVI, organizations use branding elements from both companies, either by combining the two names (as in JPMorgan Chase, see Figure 4) or by taking the name of one company and the logo of the other (Boeing kept its name but adopted McDonnell Douglas’s logo, see Figure 5):
2.3.1 Reasons to apply the Joint Brand strategy
The following chapter introduces which merger goals the Joint Brand strategy can support and the message managers intend to signal with its application. Ettenson & Knowles (2006) interviewed managers and studied 207 mergers in order to reveal their true motives for conducting the Best of Both strategy. They found that the combined identity creates a good opportunity to leverage the existing equity and association of each brand. This step allows greater continuity of customer relationship, provides time for employees to accommodate, moreover it also reduces the risk of talent and customer exodus. Because, if both companies’ visual identity remains, the employees and customers may feel, that most things (corporate culture, product quality, customer service) will stay stable or will not change dramatically. This eventually gives them a sense of security and prevents their switch from the company.
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Joint brand is also a favoured opportunity in joint venture cases where, for example, a big international company signs a partnership with a local company to enter the market. In this way, the international company, by combining its name with a local brand is likely to lay the foundation for trust in local consumers and partners. In other cases, companies tend to use this strategy when both individual brands have been developed into a national icon and the removal would have adverse effects, both externally and internally. However, beyond the flexible strategy that offers the same, they also intent to show that the companies cooperate and move together (Basu, 2006). Furthermore, the strategy is also implemented when there is a need to reconfigure the overall brand position because of the anticipated industry convergence. Finally, Basu (2006), as well as Ettenson & Knowles (2006) highlight that the companies usually apply combined identity when they are equal in the merge. Because, companies assume that when they combine their brand elements, their stakeholders will interpret it as a sign for agreement and equality.
Despite the inherent opportunities of the combined identity, the strategy is not used frequently and it is commonly used for a short period of time as a temporary measure, in order to manage the transition gradually (Aldea, 2011).
2.3.2 What does the strategy can communicate to stakeholders?
Beyond the actual cause for the merger, the merged identity can signal further information as well. An appropriate message can contribute greatly to the merger success, by emphasizing the benefits for employees, customers and other stakeholders.
According to Ettenson & Knowles (2006), the main message with this strategy is that each company plays a crucial role in the future success of the merged identity. The companies move ahead together, share a combined future, while a lot of things remain as they had been.
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The inclusion of identity signes can be interpreted as a symbol of continuity and the respect for both brands’ heritage (Spaeth, 1999), communicate synergy and a cooperative environment between the merging companies (Rao and Rueker, 1994; Cheng, 2012). However, these messages may signify different benefits for each stakeholder.
For shareholders, the joint brand can be a sign of a strong partnership that makes the merged company appealing for investments on a long term. The potential synergy and the fact that the best part of each company will be preserved and enhanced suggests strengthened operations and rationalization. Employees may see new career opportunities without leaving the firm. The continuity and respect for the brands foreshadow the respect and continuity of the existing corporate culture that eventually means security and little change in the everyday business. Furthermore, both sets of employees feel equal and valued. Finally, the main benefit for the customers is that the products of both companies will remain as before and their preferred alternative will still exist. Furthermore they can believe that the synergy between the companies may increase the quality of products and services (Ettenson & Knowles, 2006).
As mentioned before, the combined identity is most commonly used, when two equal companies merge and the companies aim to reflect the equality in the new CVI. Equality can be the final communication goal of the merger, assuming that it is favourably received by the consumers. However, it is important to mention, that equality can be a supplementary message. Emphasizing equality enables to support and further enhance the listed communicational goals as synergy, cooperation, common future, etc.
2.3.3 Sub-strategies of the Joint Brand strategy
Since this study is determined to analyze this strategy in details, this chapter introduces the sub strategies within the Joint brand strategy. As discussed before, the investigated rebranding strategies are analyzed through the application of a separate name and logo of each company, functioned as the representatives of the visual identity and the corporate identity as well.
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Machado et al. (2011) determined the three most typical combined strategies used at M&A. The first is the combination of the two brand names and a new logo (e.g.: BNP Paribas). The second is the combination of the two brands names as well as their logos (e.g.: UBS). The third is when one of the brands (usually the leader brand) endorses the other brand with its name and logo. However, in addition to these strategies, other possibilities occur as well. Machado et al. (2011) discovered further strategies by asking consumers what other combinations they can imagine. Namely, when there is a combination of the two logos and a new name, the combination of the two brands names and logos and finally when one brand endorses the other with its logo.
Ettenson et al. (2006) developed a framework that further extends the corporate rebranding strategies. They introduce 10 strategies based on what to discard, what to blend and what to create as new in the brands’ identities. The 10 strategies communicate fundamentally different things to customers, employees and investors. They further specify the above mentioned four groups based on the fact whether the leading or the target company’s name and/or symbol remains (see Figure 6). The authors identify two dominant strategies: when the target brand totally disappears or when companies exist independently in unchanged form.
Figure 6: Rebranding strategies, in light of a
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2.5 Conceptual framework and hypothesis development
The analysis of the rebranding literature unfolded interesting questions in the Joint Brand strategy, which have not been answered yet. It has been found that even though Joint Brand strategy was often applied to provide the sense of equality between the companies, there was no research on how to combine brand elements to communicate equality the most properly. Furthermore, no evidence was found that equality is favoured by consumers. Consequently, the following chapters introduces the assumptions of the research which will give answers to the aforementioned questions.
2.5.1 The influence of the number of brand elements
The combined visual identity can either encompass one or two brand element(s) of a company. If the combined identity of one company is represented with a name and a logo, while the other company is represented only with a name, the companies may not be perceived equally dominant. The assumption is based on the on the phenomenon in social psychology, called the “power of the majority”, that means the power is attributed to the group with bigger numerical size (Horowitz, 1985; Lijphart, 1997). The power of majority impacts how people make decisions. One of the most cited work of social psychology (May, 1952) defines simple majority voting as an anonymous, neutral and positively responsive choice between two alternatives. Another work, in cognitive psychology argues that the dominance effect is formed by the entity that has a greater number of attributes that the other (Hampton, 1987). In the study of Hampton (1987), the dominant schema is called the head concept and the non-dominant is called the modifier.
However, the above mentioned theories are not connected directly to marketing field, the recent research assumes their transferability. Therefore, it is presumable that the number of brand elements in the merged identity influences how dominant a company is seen in the merger.
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H1a: The company, whose brand elements outnumber the brand element of the other
company in the visual identity, will be perceived as more dominant in the merger.
H1b: If the combined visual identity includes equal number of brand elements of both
companies, the companies will be seen as equal. 2.5.2 The dominance of name versus logo
Another difference between the redeployment strategies is the application of a name versus a logo of a company. For example, one alternative is to combine a name of a company with the logo of the other company. It raises the question whether the name or the logo has a bigger influence on the dominance evaluation. In the CVI literature, it is widely accepted that the name and the logo play the most ubiquitous and influencing part in brand communications. However, it is a controversial issue whether that the name or the logo is a bigger influencer on consumers evaluation and decision making.
Some academicians (MacInnis et al., 1999; Swartz, 1983) argue that visual symbols may better personalize a brand and provide customers with a sense of connection than brand names alone do, possibly because symbols are an effective means of communicating information. Moreover, logos work better for brand differentiation as they are perceived as richer and more tangible representations of a firm than names are. Over and above, visual elements are learnt faster and remembered significantly longer than verbal stimuli (Erdelyi & Kleinbard, 1978).
On the other hand, a substantial part of researchers believes in the primacy of the name. In a standard study of Aaker (1991), a brand name is called as the basis upon which the brand equity is built. Among the distinctive sign’s (name, logo, slogan, etc.) it is the name that is talked about, asked for or prescribed (Kapferer, 2012). Furthermore, brand name has a significant strategic effect on long- term brand performance, pointing far beyond its role as a sub-element of the marketing mix (Park et al., 1996). In sum, the perception of an organisation will vary depending on its name (Muzellec and Lambkin, 2008).
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What is more relevant for the recent research, the literature on co-branding and M&A also found the name as more important element in brand alliances. Levin et al. (1996) emphasized the gravity of the name, while Ettenson and Knowles (2006) stated, when a name and a logo are combined, the name is the more pronounced element. This study builds on the latter thoughts.
However, it is important to clarify, it does not state that names are more important in brand communication than logos. Nonetheless, it assumes that names have a bigger contribution to the perceived dominance of a company in a merger context.
H2: The application of the company name in the visual identity results in a stronger perceived
dominance than the application of the logo.
2.5.3 The attitude toward a merger of equal companies
As stated before, combined identity is often applied when two roughly equal companies merge, in order to emphasize the unity by communicating it in the visual identity as well (Rosson and Brooks, 2004; Ettenson et al., 2006; Basu, 2006). The phenomenon, when a merger is implemented in the sense of equality, with no designated acquirer is called the “merger of equals”. The most known companies who combined their identity to achieve equality are inter alia, PricewaterhouseCoopers (1998), Daimler-Chrysler (1998), AOL TimeWarner (2000) and ConocoPhillips (2002). Cheng (2012) detects a numerous reason why companies choose to engage in a “merger of equals” (MOE) as against to a typical M&A transaction, such as to preserve employee morale.
However, the application of MOE raises the question how equality impacts consumers’ evaluation about the merger. After analyzing acquirer-dominant mergers, Thorbjornsen and Dahlén (2011) found that customers of a target brand will likely experience reactance, because of “being taken over” if and when an acquiring brand integrates the two companies either under the acquirer corporate brand or under a new brand name.
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Other academicians also detected the dominant entity’s attitude and beliefs about superiority as one of the most important causes of merger or acquisition failures (Deiser, 1994; Hambrick and Canella, 2003 in Meyer and Altenbourg, 2007). Rosson and Brooks (2004) also mention that often the incorporation is not carried out in the spirit of partnership, but is more comparable to a colonial conquest. Conversely, communicating equality between the merging companies reflects that both companies will benefit from the merger (Cheng, 2012). This symbolic gesture aims to alleviate potential conflicts, smooth cultural differences (Drori et al., 2011), facilitate the post-merger integration process and consumers’ acceptance by promoting a “cooperative” rather than “competitive” environment between the merging parties (Cheng, 2012, Schweiger et al., 1994).
By using combined identity and communicating equality, they can leverage from the sense of synergy, the merged entity can achieve. As presented before, in the study of Machado et al., (2011) when merging two famous and very familiar brands, respondents behave ethically and feel that elements of the two brands’ identities should be preserved.
On the other hand there are few studies that argue, an acquirer-dominant merger not necessarily results in decreased brand equity. Lambkin & Muzellec (2010) and Stellingwerf (2014) found that B2B stakeholders welcome acquirer brand redeployments.
No studies tried to compare whether mergers perceived as equal, or mergers with a dominant party are favoured. The recent research addresses to test theories by stimulating a merger of two equal companies and expects the following:
H3: The merged identity will be more positively evaluated when the merging companies are
28 2.5.4 The conceptual model
The conceptual model for this paper is illustrated in Figure 7. To summarize, this study firstly investigates the attitude of consumers toward the merged company. It aims to reveal how the number (H1) and the type (H2) of the brand elements impact consumers’ perception of the companies’ dominance. Thirdly, another objective of the research is to study whether the perceived dominance has an impact on their attitude, particularly in case of mergers with equally rated companies (H3).
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3. Methodology
In this chapter, the applied research method will be discussed. Firstly, the chapter introduces the research strategy. Secondly, the variables of the experimental model and their measurement are described. The data collection contained a pre-test and the main study, therefore both procedures are investigated. Finally, the chapter ends with a brief description of the statistical procedures.
3.1 Research strategy
The study uses an inductive, “bottom up” approach, therefore it draws general conclusions from specific observations. In order to explore the casual links between independent and dependent variables, experiment design is used. Data is gathered at one period in time, applying a cross-sectional design. Moreover, a non-probability, convenience sampling is used in order to collect data. The pre-test and the main study were conducted through an online survey and distributed via social media. The respondents were properly informed in advance that their participation was anonymous and voluntary (Saunders & Lewis, 2014). The next chapter gives an overview on the conduction and results of the pre-test, as a preliminary step to understand the main study.
3.2 Pre-test
In order to find 2 appropriate names and 2 logos for the main-study – as the components of the treatments - , 9 fictional names and 9 fictional logos are pre-tested. The aim of the research is to ensure their equality, perceived by the aesthetic design. Both the names and logos are carefully selected in order to avoid the altering effect of name/logo types on consumer preferences. The company names are in English, clear (easily understandable) and meaningful (Kohli, Harich, Leuthesser, 2005), descriptive or associative, with direct link to the product or service (film and film production) (Muzellec, 2006).
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All the logos were figurative and represented an object -connected to film production-, that have familiar and widely recognised meaning (Machado et al., 2012).
The pre-test survey is conducted online and includes 44 participants. All participants evaluate all names and logos, therefore they have the opportunity to compare them implicitly. The respondents are asked 1.) to what extent they like the name/logo; 2.) to what extent they perceive it as familiar; and finally, based on the name/logo evaluation 3.) how powerful they perceive the company. These factors are measured on a five-point Likert scale. Finally, the names and logos are compared in a paired t-test and the two names and two logos that have the smallest difference in likeability, familiarity and likeability are selected. These are
Dreamfilm & Premier Pictures, as well as Logo1 & Logo2 (Figure 8).
As Table 1 shows below, there is no significant difference between the evaluation of the names, based on its likeability (t= -0,606; df=40; p=0,548), familiarity (t= 0,713; df=39; p=0,480), and powerfulness (t= -0,942; df=40; p=0,352). Moreover, as Table 2 demonstrates there is no significant difference between the evaluation of logos either. Its likeability (t= -0,326; df=40; p=0,746), familiarity (t= 0,615; df=40; p=0,542), and powerfulness (t= -0,243; df=40; p=0,809) measures exceeded the significance level (p> 0,05).
Mean SD SE 95% Confidence Int. t df Sig (2-t.) Lower Upper Dreamlike - Prelike -,122 1,288 ,201 -,529 ,285 -,606 40 ,548 Dreamfam - Prefam ,150 1,331 ,210 -,276 ,576 ,713 39 ,480 Dreampow - Prepow -,195 1,327 ,207 -,614 ,224 -,942 40 ,352 Figure 8
31 Mean SD SE 95% Confidence Int. t df Sig (2-t.) Lower Upper Logo1like – Logo2like ,073 1,439 ,225 -,381 ,527 ,326 40 ,746 Logo1fam – Logo2fam -,122 1,269 ,198 -,522 ,279 - ,615 40 ,542 Logo1pow – Logo2pow ,049 1,284 ,200 -,356 ,454 ,243 40 ,809
Therefore, the pre-test enabled to eliminate the potential confounding of the preference disparity arising from the aesthetics and the meaning of the name/logo and made it possible to measure the pure effect of the different redeployment strategies.
3.3 Research construct and statistical procedure
This chapter introduces the construct of the main study. Firstly, the independent variables and treatments, secondly the dependent variables and their measurement are described. In order to test the hypotheses introduced in the previous chapter, the statistical procedures are also discussed.
3.3.1 Independent variables
The primary purpose of the main study is to test, whether the number and the type of the brand elements (independent variables) applied in the CVI have an impact on the company‘s perceived dominance.
The Number reflects that -relative to each other- , how many brand element of a company is included in the visual identity after the merger. As the study examines one company’ point of view (Dreamfilm) in the survey and the analysis as well, the number of Dreamfilm’s brand elements can be less, equal of more compared to Premier Pictures. In case of the Type of brand elements, the new CVI may involve the name or the logo of Dreamfilm.
Since these independent variables can not be measured directly, the name and type effects are incorporated in different presentations of the CVI.
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The study applies combinations -made up of the names and logos -, which carries the difference in the number or type of brand elements. All combinations include the brand elements of both companies, as the research investigates the Joint Brand strategy. However, due to the limited nature of the study, not all the possible sub strategies are analyzed, but only those that combine existing brand elements and, at least one company name.
Based on the altering opportunities, how type and number of brand elements can be applied, the research distinguishes between 4 major groups:
The name of one company and the logo of the other company The name of one company and combined logo of the companies Combined name of the companies and the logo of one company Combined names and combined logos
Nevertheless, taking account that the presentation of the company (in the CVI) and the order of the elements also play role, these major groups can be further extended. Consequently, 14 treatments and therefore 14 different questionnaires were distinguished in the research (see Appendix).
3.3.2 Dependent variables
Perceived dominance of the companies
The research built on the study of Hendrikx (2013) that originally measured the perceived dominance of brands in a brand alliance. Participants were asked to evaluate how they perceive the dominance of one company, therefore the dominance of the other company was concluded from this answer.
The scale consisted of three questions. The first two questions used a Five-point Likert scale and asked participants to state to what extent they agree with the following statements: “Dreamfilm plays a more dominant role in this merger than Premier Pictures” and “Dreamfilm is associated more with the new company than Premier Pictures”.
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The third question inquired how much contribution the respondents allocate to Dreamfilm and was measured on a continuous scale, ranged from 1 to 100. In order to prepare the data for the analysis, dominance variables were created based on these three questions, namely, dom1;
dom2; dom. Furthermore, a mean variable Dom was also computed from the three dominance
measures. Since the third, dom3 was measured on a continuous level, contrary to dom1 and
dom2, there was a need to transform it [(dom3-1)/25+1].
Attitude toward the merged company
The research adopted the attitude scale of Basil and Herr (2006), applied for measuring the attitude for a CRM alliance between two companies. The scale requested participants to reveal their agreement on the statements, to what extent the merged company is appealing,
good, appropriate and to what extent they like to company. These questions were assessed on
a Five-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree). 3.3.3 Main study (statistical procedure)
The research aims to reveal how the number and the type of brand elements (the independent variables) have an impact on the perceived dominance (dependent variable).
In order to reveal the relationship between the number of brand element and the perceived dominance (H1a), an ANOVA analysis is applied. As the independent variables are measured on a categorical level, there is a need to transform them into dummy variables. The analysis is conducted from the perspective of one company. The combinations are grouped in order to make the hypothesis testing clearer and simpler. Therefore in case of the Number variable, three dummy variables are distinguished, based on how many brand element is used from Dreamfilm compared Premier Pictures: less, equal and more. Less, -that means less brand element is used from Dreamfilm than from Premier Pictures- contained these combinations [name(s)_logo(s]): P_PD; P_DP; PD_P; DP_P.
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Equal included: PD_PD, PD_DP, DP_DP, DP_PD, while more was measured by D_PD;
D_DP; DP_P; PD_D. In case of the Type of brand elements, the name variable includes cases when Dreamfilm name is used and logo, when the logo of Dreamfilm is used. The study examines the different effect among the three groups (less, equal, more ) on perceived dominance. It is revealed by comparing the means of the less, more and equal groups.
In case of questioning whether the equal number of elements results in equal perceived dominance, a one sample t-test is used (H1b), this compares the sample-estimated population mean to a comparison population mean of 3. The hypothesis is supported if the mean of the
equal group does not differ significantly from the comparison mean.
Moreover, the name (D_P) and logo (P_D) groups (H2) are compared by an ANOVA to reveal whether they affect perceived dominance differently. If yes, which one leads to a higher value. When testing this hypothesis, the name and logo combinations enclose only one name or logo of a company, to eliminate the number effect, differently from the combinations used in H1. The results supports H3 hypothesis when the dominance value of name significantly differ from and exceeds the dominance value of the logo.
Finally, the study tests the possible relationship and the effect of perceived dominance on attitude (H3). In addition to the examination of the general relationship, the study pays special attention to the companies perceived as equals. The hypothesis seeks answer whether the equally dominant companies result in a higher positive attitude contrary to the companies that are not seen as equals in a merger. Thus, a linear regression model tests this assumption from a perspective of Dreamfilm. A significant correlation means that a higher perceived dominance of one company assumes a higher positive attitude and the hypotheses is rejected.
Since there might be an effect of the order of brand elements on the perceived dominance (e.g.: in DP_D versus PD_D), the research eliminates this effect by testing both order variants and counting with its mean in the analysis.
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4. Results
4.1 Descriptive statistics
First of all, descriptive statistics, sample descriptive and reliability were analyzed. 4.1.1 Sample descriptives
The main study asked 274 people it totals. All these surveys were completely filled out and had no missing data. The respondents were mainly students with a completed bachelor (n=133) and master (n=71) degree. Most of the participants were aged between 18 and 25 (n=181), but other generations were also represented, mainly people aged between 26 and 34 (n=46), and between 35 and 52 (n=22). 45% of the respondents were male and 55% female. (Table 3)
Table 4 contains the means, standard deviations and correlations between the non-categorical variables. The relevant correlations should be highlighted. The sub-questions (att1, att2, att3,
att4) all have a significant correlation with Total attitude (r > 0,847, p < 0,01). Similarly, the
dominance measures (dom1, dom2, dom3) that constitute the Total dominance strongly
Age Total (N=274) Frequency Percent (%) Under 18 6 2,2 18-25 189 69,0 26-34 49 17,9 35-54 26 9,5 55-64 3 1,1 65 and over 1 0,4 Education Total (N=274) Frequency Percent (%) High School 41 14,6 Bachelor 170 50,4 Master 79 28,7 Doct./PhD 10 3,6 No school 4 1,5 Gender Total (N=274) Frequency Percent (%) Woman 149 54,4 Man 125 45,6
Table 3: Sample descriptives:
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correlate with it (r > 0,838, p < 0,01). The correlation matrix also indicated the relationship between Total dominance and Total attitude variables, as the focus point of this study. A weak, but significant correlation can be detected (r = 0,174, p<0,01). The means of the two main variables, Total attitude (M= 3,06) and Total dominance (M= 3,12) score around the middle value, 3. SD of Total attitude (0SD=0,893) is smaller than of Total dominance (SD=1, 047), but none of them are radical.
*. Correlation is significant at the 0.05 level (2-tailed). **. Correlation is significant at the 0.01 level (2-tailed).
4.1.2 Reliability
The reliability of the dominance scale was tested. It has high reliability (α>0,7), which indicates a high level of internal consistency. The Cronbach’s Alpha of the dominance scale scored α=0,856. The corrected item-total correlations showed that all the items have a good correlation with the total score of the scale (above 0.30). Furthermore, none of the items would significantly affect reliability if they were deleted.
Similarly to the dominance scale, the attitude scale proved to be reliable, with a high value of α=0,900. The removal of any question would have resulted in a lower Cronbach’s
N Mean SD 1. 2. 3. 4. 5. 6. 7. 8. 1. att1 274 3,08 1,002 2. att2 274 2,93 1,041 ,743** 3. att3 274 3,09 ,972 ,722** ,738** 4. att4 274 3,16 1,057 ,621** ,670** ,671** 5. Total att. 274 3,06 ,893 ,877** ,898** ,888** ,847** 6. dom1 274 3,09 1,365 ,147* ,193** ,118 ,228** ,197** 7. dom2 274 3,11 1,323 ,087 ,139* ,103 ,152* ,138* ,794** 8. dom3 274 3,14 ,751 ,085 ,137* ,060 ,154* ,126* ,712** ,687** 9. Total dom. 274 3,12 1,047 ,121* ,175** ,109 ,200** ,174** ,939** ,930** ,838**
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Alpha and the corrected item-total correlations were higher than 0,3, thus no question was excluded.
4.1.3 Equality of treatment groups
The study included 14 treatment groups, based on the 14 name and logo combinations. Before analysing the results, there was a need to ensure the equality of the groups on everything, except of the measured variables; or if differences exist, they do not impact the results significantly.
Firstly, the 14 treatments groups were compared in crosstabs, based on the gender, the age and the education level of the respondents (in Appendix 8.4.1). Some outliers were found in all three dimensions, such as the underrepresentation of people between 18-25 in D_P group (Count(C)=17, Expected(E)=23, Adjusted residual(AR)= -2,5) or the overrepresentation of woman in DP_DP (C=14, E=7, AR= 2,7). Due to the high number of outliers and the fact that in Age and Education, 82,1% and 71,4% of the cells had expected count less than 5, the 3 and 2 test groups -which provided the base for the analysis-, were also compared in crosstabs.
In demographic terms, no significant difference was found between the respondents of Type groups Name and Logo. However, the three groups within Number of elements significantly differed in few aspects, such as the unequal distribution of men and women in the equal group (M: C=24, E=34, AR= -2,9; F: C=51, E=40, AR= 2,9). Furthermore, other differences were found between the age groups in the more group and between the educations in the less group. In order to prove that these differences do not have a significant impact on the measured variables, the means of gender, age and education groups were analyzed.
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The results indicated no difference in means (of total attitude and dominance) between the demographic groups (Appendix 8.5). In other words, the inequality of tests groups will not influence the results, because the evaluation on variables does not vary significantly between the gender, age and education groups. Therefore the data is appropriate for further analysis.
4.2 Hypotheses testing
H1a: The more brand elements of one of the merging companies are used in the combined
identity, the more dominant the company will be considered in the merger.
The number effect was tested by ANOVA model. The first hypothesis assumed that there is a linear relationship between number of brand elements (independent variable) and to what extent the company with more brand element(s) is evaluated as more dominant (dependent variable). It suggested that the more brand elements were used, the more dominant the company will be seen.
The groups less, equal and more were compared to reveal whether their means significantly differ from each other and represented the ratio of Dreamfilm’s (D) brand elements compared to Premier Pictures (PP) brand elements.
There was a statistically significant effect of the type of brand element on perceived dominance. The value is the probability that the null hypothesis for the full model is true. Table 5 illustrated that the model was significant, with F(2,213)=42,915 and p<0,001.
SS DF MS F p
Between groups 65,648 2 32,824 42,915 ,000
Within groups 162,916 213 ,765
Total 228,564 215
